5 Employment and HR Trends Small Business Owners Should be Mindful of in 2014
The Affordable Care Act, insurance exchanges, and history-making updates in same-sex marriage rights were just some of issues in 2013 that had significant impacts on small businesses. As we approach 2014, more issues are sure to come. Here is a rundown of what may be the biggest challenges for small-business owners and HR managers going into the year ahead.
Compensation and benefits concerns for small businesses
In 2014, small business recruitment efforts may be more focused on compensation and benefits to attract high-performing candidates. The innovation provided by top-level employees can be the key to successful company growth and can be leveraged to rise above the competition. According to The Society for Human Resource Management (SHRM), “U.S. base pay increases are projected to average around 3 percent across industries and positions in 2014, with increased pay differentiation for high performers.”
In addition, due to the launch of private health care exchanges for the 2013 open enrollment season, next year’s challenge may be to offer more affordable health care coverage options to control health care premium costs using online benefits management tools. While nearly half of all companies currently offer some type of corporate-sponsored wellness program, more companies may choose to use this method to support preventative care and increased work-life balance for employees.
Small business employee performance management
Performance management has always been difficult to measure in smaller organizations, particularly when there have been few tools to accurately compare the results across industries. In 2014 however, this could change as more employers want to see tangible results. New employee time-keeping and attendance products allow companies to better monitor and therefore reduce the costs associated with paid time-off abuse and absenteeism.
Employee performance management might become a vital focal area as small businesses invest more in the success of their human capital, with the expectation of a positive return on investment. Technology such as gamification of training modules and cloud-based project management systems for on-the-go performance management will continue to help directors communicate to millennial employees, as well as engage them in learning initiatives. These systems could become commonplace in the workplace to attract, train, and retain high-performance employees in cross-functional teams.
Social media use and brand integrity for small businesses
Over the last decade, the use of social media in the small-business sector has become a critical aspect of corporate communications and brand management for practically every organization. No more critical is the use of social networking than in the human resource and recruitment departments, areas that have typically shied away from this due to confidentiality fears. Forbes magazine called 2013 “The Year of Social HR,” citing a Silkroad survey that indicated nearly 75 percent of HR professionals now use social media for a variety of activities including recruitment, employee development, and corporate communications.
Next year, small businesses can expect that this trend may continue with more management and HR departments using social networking to preserve and enhance the brand message of their companies. Social recruitment and networking resources have increased in scope and use, with many companies able to turn strictly to social recruitment strategies and onboarding models that emulate the corporate brand.
Recruitment and changing workforce demographics
Just as in 2013, the career outlook and recruitment could proceed at a positive and consistent rate next year. According to most recent reports from the U.S. Bureau of Labor Statistics, “The U.S. economy is expected to expand at a moderately strong pace, with restrained inflation, continuing strong productivity growth, and a labor force growing at a steady rate with a favorable outlook for a wide array of job opportunities.” Keep in mind that more companies than ever before are offering flexible and remote work opportunities in order to attract the best candidates, while the soon-to-be retired workforce is leaving skills gaps in higher level assignments that will require a renewed focus on training and education initiatives.
Tax credit updates
Special tax credits for small businesses underwent major transformation in 2013, stemming from the Defense of Marriage Act (DOMA) and Work Opportunity Tax Credits (WOTC) for hiring returning veterans.
The IRS issued special procedures for employers to claim refunds of FICA taxes that were previously paid for same-sex marital employee benefits when section 3 of DOMA was struck down in June in the landmark case United States v. Windsor. In September, the courts ruled that same-sex married couples may be considered as married for federal tax purposes and benefits. According to the US Treasury and the IRS, this covers filing status, IRA contributions, and claims for earned income credit and child tax credits. The expansion of benefits and retirement coverage to domestic partners and their children is something that could gain momentum as more states approve same-sex marriages. The use of payroll and employment tax software that provides legal updates automatically may assist in handling the challenges of DOMA.
Much of the WOTC debate revolves around whether or not small employers can offer returning disabled U.S. veterans rewarding assignments that validate the generous tax credits, and if this could be discriminatory in nature as it targets specific groups of workers. The WOTC jumped to as much as $9,600 in 2012 for an eligible worker.
Updates from the IRS around DOMA regulations are still to come, such as a system for the management of same-sex partner health benefits and compensation. Detailed governmental reporting on the success of the WOTC program could also come as we head into the new year.